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INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES | 12 Months Ended
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Dec. 31, 2021
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES |
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES | 5. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES ​ The Company’s investments in real estate ventures, consisting of common ownership interests, are summarized as follows (dollars in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | CubeSmart | ​ | Number of Stores as of | ​ | Carrying Value of Investment as of
​ | ​ | Ownership | ​ | December 31, | ​ | December 31,
Unconsolidated Real Estate Ventures |  | Interest | ​ | 2021 | ​ | 2020 |  | 2021 | ​ | 2020
Fontana Self Storage, LLC ("Fontana") (1) | ​ | 50% | ​ | 1 | ​ | - | ​ | $ | 14,225 | ​ | $ | -
Rancho Cucamonga Self Storage, LLC ("RCSS") (1) | ​ | 50% | ​ | 1 | ​ | - | ​ | ​ | 21,536 | ​ | ​ | -
191 V CUBE LLC ("HVP V") (2) | ​ | 20% | ​ | 5 | ​ | - | ​ | ​ | 16,080 | ​ | ​ | -
191 IV CUBE Southeast LLC ("HVPSE") (3) | ​ | 10% | ​ | 14 | ​ | 14 | ​ | ​ | 4,541 | ​ | ​ | 5,015
191 IV CUBE LLC ("HVP IV") (4) | ​ | 20% | ​ | 28 | ​ | 21 | ​ | ​ | 23,223 | ​ | ​ | 21,760
CUBE HHF Northeast Venture LLC ("HHFNE") (5) | ​ | 10% | ​ | 13 | ​ | 13 | ​ | ​ | 1,291 | ​ | ​ | 1,628
CUBE HHF Limited Partnership ("HHF") (6) | ​ | 50% | ​ | 28 | ​ | 35 | ​ | ​ | 38,855 | ​ | ​ | 63,668
​ | ​ | ​ | ​ | 90 | ​ | 83 | ​ | $ | 119,751 | ​ | $ | 92,071
​
| (1) | On December 9, 2021, the Company completed the acquisition of LAACO, which included a 50% interest in Fontana and RCSS, each of which owns one self-storage property in California. As of the date of acquisition, the Company recognized differences between the Company’s equity investment in Fontana and RCSS and the underlying equity reflected at the venture level. As of December 31, 2021, this difference was $13.5 million for Fontana and $20.1 million for RCSS. These differences are being amortized over the expected useful life of the self-storage properties owned by the ventures.
​
| (2) | On March 17, 2021, the Company invested a 20% ownership interest in a newly-formed real estate venture that acquired its initial self-storage property located in Florida. As of December 31, 2021, HVP V owned five self-storage properties located in Florida (2), New Jersey (2) and New York (1). HVP V paid an aggregate of $143.7 million for these properties, of which $2.2 million was allocated to the value of the in-place leases. These acquisitions were funded initially through pro-rata contributions by the Company and its unaffiliated joint venture partner. The Company’s total contribution to HVP V related to these acquisitions was $22.6 million. During the year ended December 31, 2021, the venture closed on an $80.6 million secured term loan. The loan bears interest at SOFR plus 2.05% and matures on September 30, 2025 with an option to extend the maturity date through September 30, 2026, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the loan agreement.
​
| (3) | The stores owned by HVPSE are located in Florida (2), Georgia (8) and South Carolina (4). HVPSE paid $135.3 million for these stores, of which $7.7 million was allocated to the value of the in-place lease intangible. The acquisition was funded primarily through the venture’s $81.6 million secured term loan. The remainder of the purchase price was contributed pro-rata by the Company and its unaffiliated joint venture partner. The Company’s total contribution to HVPSE related to this portfolio acquisition was $5.6 million. The secured loan bears interest at LIBOR plus 1.60% and matures on March 19, 2023 with options to extend the maturity date through March 19, 2025, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the loan agreement.
​
| (4) | The stores owned by HVP IV are located in Arizona (2), Connecticut (3), Florida (4), Georgia (2), Illinois (5), Maryland (2), Minnesota (1), Pennsylvania (1) and Texas (8). The Company’s total contribution to HVP IV in connection with these store acquisitions was $32.0 million. During the year ended December 31, 2021, HVP IV entered into a new $221.6 million secured
|  | loan, which bears interest at LIBOR plus 1.95% per annum, and matures on April 19, 2025. HVP IV used the proceeds from this loan to repay its existing loans (totaling $137.7 million) in full.
​
| (5) | The stores owned by HHFNE are located in Connecticut (3), Massachusetts (6), Rhode Island (2) and Vermont (2). The Company’s total contribution to HHFNE in connection with these store acquisitions was $3.8 million. As of December 31, 2021, HHFNE had an outstanding $45.0 million secured loan facility, which bears interest at LIBOR plus 1.20% per annum and matures on December 16, 2024.
​
| (6) | The stores owned by HHF are located in North Carolina (1) and Texas (27). On October 5, 2021, HHF sold seven stores in Texas for an aggregate sales price of approximately $85.0 million. The venture recorded gains which aggregated to approximately $46.9 million in connection with the sale. On January 21, 2021, HHF entered into a new $105.0 million secured loan, which bears interest at 2.58% per annum and matures on February 5, 2028. HHF used the proceeds from the new loan to repay its existing outstanding $100.0 million loan in full.
​ On June 5, 2019, HVP III, a venture in which the Company held a 10% interest, sold 50 stores located in Florida (3), Georgia (4), Michigan (17), North Carolina (3), South Carolina (15) and Tennessee (8), to an unaffiliated third-party buyer for an aggregate sales price of $293.5 million. As of the transaction date, HVP III had five mortgage loans with an aggregate outstanding balance of $22.9 million, as well as $179.5 million outstanding on its $185.5 million loan facility, all of which were defeased or repaid in full at the time of the sale. Net proceeds to the venture from the transaction totaled $82.9 million. The venture recorded gains which aggregated to approximately $106.7 million in connection with the sale. Subsequent to the sale, the Company acquired its partner’s 90% ownership interest in HVP III, which at the time of the acquisition, owned the remaining 18 storage properties (see note 4). ​ Based upon the facts and circumstances at acquisition of Fontana and RCSS and formation of HVP V, HVPSE, HVP IV, HHFNE, and HHF (the “Ventures”), the Company determined that the Ventures are not VIEs in accordance with the accounting standard for the consolidation of VIEs. As a result, the Company used the voting interest model under the accounting standard for consolidation in order to determine whether to consolidate the Ventures. Based upon each member's substantive participating rights over the activities of each entity as stipulated in the operating agreements, the Ventures are not consolidated by the Company and are accounted for under the equity method of accounting (except for HVP III, which was consolidated as of June 6, 2019). The Company’s investments in the Ventures are included in Investment in real estate ventures, at equity on the Company’s consolidated balance sheets and the Company’s earnings from its investments in the Ventures are presented in Equity in earnings of real estate ventures on the Company’s consolidated statements of operations. ​ The amounts reflected in the following table are based on the historical financial information of the Ventures. The following is a summary of the financial position of the Ventures as of December 31, 2021 and 2020: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | December 31,
​ | ​ | 2021 |  | 2020
Assets | ​ | (in thousands)
Storage properties, net | ​ | $ | 850,250 | ​ | $ | 662,833
Other assets | ​ |  | 34,760 | ​ |  | 18,112
Total assets | ​ | $ | 885,010 | ​ | $ | 680,945
​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities and equity | ​ | ​ | ​ | ​ | ​ | ​
Debt | ​ | $ | 526,972 | ​ | $ | 359,985
Other liabilities | ​ | ​ | 14,500 | ​ | ​ | 11,588
Equity | ​ | ​ | ​ | ​ | ​ | ​
CubeSmart | ​ |  | 86,083 | ​ | ​ | 92,071
Joint venture partners | ​ |  | 257,455 | ​ | ​ | 217,301
Total liabilities and equity | ​ | $ | 885,010 | ​ | $ | 680,945
​ | ​ | ​ | ​ | ​ | ​ | ​
​ ​ The following is a summary of results of operations of the Ventures for the years ended December 31, 2021, 2020 and 2019: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the year ended December 31, |
​ |  | 2021 |  | 2020 |  | 2019 |
​ | ​ | (in thousands) | ​
Total revenues | ​ | $ | 88,449 | ​ | $ | 67,239 | ​ | $ | 72,582 | ​
Operating expenses | ​ |  | (37,967) | ​ |  | (30,755) | ​ |  | (32,134) | ​
Other expenses | ​ | ​ | (1,138) | ​ | ​ | (430) | ​ | ​ | (3,227) | ​
Interest expense, net | ​ |  | (12,031) | ​ |  | (11,585) | ​ |  | (14,927) | ​
Depreciation and amortization | ​ |  | (37,805) | ​ |  | (33,086) | ​ |  | (30,107) | ​
Gains from sale of real estate, net | ​ | ​ | 46,966 | ​ | ​ | — | ​ | ​ | 106,667 | ​
Net income (loss) | ​ | $ | 46,474 | ​ | $ | (8,617) | ​ | $ | 98,854 | ​
Company’s share of net income (loss) | ​ | $ | 25,275 | ​ | $ | 178 | ​ | $ | 11,122 | ​
​ The results of operations above include the periods from January 1, 2019 through June 6, 2019 (date of consolidation) for HVP III. ​

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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